Bitcoin (BTC) has experienced a significant drop, dropping below the $68,000 level, as opposed to its previous price of around $70,000. This drop in Bitcoin's value can be attributed to several key factors that have affected the broader cryptocurrency market.
Source: CoinMarketCap
Factors influencing Bitcoin price decline
Today's drop in Bitcoin prices can be primarily attributed to the S&P Global Purchasing Managers' Index (PMI) report, which suggests a strong US economy. This has led to a strong dollar and put pressure on risk assets such as cryptocurrencies.
A PMI report said the economy was growing at its fastest pace in two years, traders changed expectations for interest rate cuts, and pressure mounted on Bitcoin and other digital currencies.
At the same time, anticipation is also building for the U.S. Securities and Exchange Commission (SEC) decision regarding the Spot Ether (ETH) Exchange Traded Fund (ETF). This could be because market participants are closely watching the decision that could have a major impact on the market. Crypto analyst Caleo said the market reaction could be dramatic depending on the decision made. He said
“If the ETH ETF could be rejected today, I wouldn't be surprised if the price spiked just as hard as the recent surge.”
Cryptocurrency Market Sentiment and Regulatory Landscape
Cryptocurrency markets are also influenced by regulatory news and overall market sentiment. The SEC has taken a fairly conservative response to the cryptocurrency bill recently approved by the House of Representatives.
SEC Chairman Gary Gensler said the SEC is ready for dialogue, but continues to enforce the law to ensure that token operators serve investors and make legally required disclosures. I pointed out.
Apart from regulatory issues, other factors that may have contributed to the decline include a large number of sell orders in the market. For example, trading firm Symbolic Capital Partners sold 6,968 ETH worth $27 million in one minute, which led to increased selling pressure in the market.
ETH Price Trends and Market Speculation
Anticipation surrounding the SEC's decision can also be seen in the context of the “buy the rumor, sell the news” phenomenon seen in financial markets. This behavior, where prices rise in anticipation of an event and then fall after the event occurs, is widespread in the cryptocurrency market.
At the same time, the Ethereum market has been extremely volatile this week, with the price of ETH rising by over 22% in anticipation of the ETF's approval, which was characterized by a short squeeze and heavy buying, contributing to large price movements in the market.
Source: CryptoQuant
CryptoQuant also reports that the ETH futures market is very active, with total open interest reaching 3.2 million ETH (equivalent to $11 billion), the highest level since January 2023. This increase was mainly due to strong buy orders pushing the price up, one of the largest hourly liquidations of the year with 9.3K ETH.
Additionally, the ETH-BTC open interest ratio also increased from 0.54 to 0.67, suggesting that more investors are leaning towards Ethereum over Bitcoin. Moreover, the ETH fund discount rate was further reduced to a two-month low of 17%, indicating growing interest in Ethereum compared to Bitcoin among investors.
Also read: XRP Price Prediction: Monumental Bull Market Could Be Coming as Coinbase Launches XRP Trading in New York
